Global Electrification: Multinational Enterprise and International Finance in the History of Light and Power, 1878–2007 (review)

The rise of electrification and global financial innovation occurred almost simultaneously, and to an important degree, in a mutually reinforcing manner. The first electric utilities that emerged in the late nineteenth-century United States and Europe required innovative approaches for raising the considerable funds necessary to sustain them within changing social and political contexts.

The novelties of multinational finance that accompanied—and made possible—the electrification process throughout the world constitute the focus of this ambitious book. Global Electrification provides a useful complement to a growing historiography dealing with the embrace of electric power in society, such as Thomas Hughes' seminal Networks of Power: Electrification in Western Society, 1880–1930 (Baltimore, 1983) and David Nye's Electrifying America: Social Meanings of a New Technology, 1880–1940 (Cambridge, Mass., 1990). Most originally, it helps to explain how nations—those with and without industrial traditions—found the means to construct a "modern" electrical infrastructure, enabling citizens to enjoy the productivity-enhancing benefits that electricity appeared to offer.

Those means were not, as the authors point out, uniform. Rather, investors and financiers created a host of multinational institutions influenced by national traditions, politics, and legal practices: satellite companies of manufacturers, eager to sell equipment locally and internationally; "enclave" companies that needed electric power at their distant plantations, mines, or oil fields; holding companies that provided capital and management expertise to operating utilities in foreign countries; and "free-standing" companies that drew from multinational investment but did not have much control from abroad. All of these organizations had further ties to a multitude of actors within "clusters," "networks," and "business groups" that involved banks, insurance companies, trusts, brokers, and promoters as financial intermediaries. The description of these stakeholders could make one's head swirl, but it demonstrates that establishing electric-power networks required financial innovation within rapidly shifting social and political environments.

Though the book's core theme deals with the globalization of financial arrangements for developing the infrastructure of electrification, the authors also note that nationalization (a form of "domestication") of utility systems became the norm immediately after World War II. They highlight the factors that contributed to the end of globalization, most notably the growing view that national governments could better ensure oversight of their power networks than could foreign companies, which had primary interests elsewhere. Meanwhile, the book appropriately deals with the recent changes in electricity systems that have contributed to the return of investment by multinational players. Hence, it explains that poorly perceived government regulation spurred a movement beginning in the 1980s to restructure power systems. Deployment of certain free-market principles and the end of restrictive rules on foreign financial participation meant, for example, that during the last two decades, a Scottish company could purchase an American utility, a German firm could hold utility interests in several European countries, and an American business could control power plants in South America. The authors argue that managers of such multinational enterprises would do well to learn from history that forces could push back the pendulum to the other side of the swing—in other words, to nationalization.

Although this book enriches the understanding of how electric-power systems evolved, it differs from the easily read Electrifying America, which contains captivating descriptions of culture to explain the social integration of a new energy commodity. Global Electrification contains heavy, dry, academic prose that makes for tough slogging at times, especially for those unschooled in economic or business history. The authors devote one long chapter (out of seven) to the analytical tools necessary for reading the rest of the tome, and they provide extensive detail concerning the financing arrangements of electric companies in far-flung parts of the world. This detail highlights the notion that electric-power enterprises constituted complex, multifaceted systems comprising technological, political, and financial elements, all of which evolved together.